Bitcoin Blog a1

Wednesday, September 21, 2016

Not another 2017 price prediction, but sort of.

99 bitcoin, a blog I follow, had some interesting things to say about the price of bitcoin next year. There are a few flaws in the article though. One, it asserts that the halving increases price. This is not necessarily true; the halving is just a reduction to the increase in supply. This potentially could help sustain a higher price, as less fiat needs to be spent on btc in order to keep the exchange rate constant.

I go over this concept in another article, but when bitcoin was, near its peak, $1000 a coin, $25,000 every 10 minutes had to be spent on the 25 new bitcoins being mined in order to maintain this price. With the number of bitcoins being mined reduced by half ( that is 1 2.5 bitcoins every 10 minutes), only $12,500 would need to be spent on new bitcoins to maintain the same $1000 price per bitcoin. This potentially means that a higher price is easier to sustain. But this reduction to the increase in supply, in and of itself, does not cause an increase in price.

In short, I don’t think that the halving means bitcoin will rise in price next year. It is possible it will for other reasons, but I won’t attribute this to the halving.